A new report from Credit Suisse and law firm CMS analyses the financial and legal implications of the COVID-19 pandemic on M&A transactions in Western Europe. The report – Impact of COVID-19 on European M&A activity – shows that 2020 got off to a strong start with European M&A volumes in mid-March increasing by 27 percent over the same period last year
However, M&A volumes dropped significantly towards the end of March and continued to drop progressively in April due to the COVID-19 pandemic and the implementation of social distancing measures.
But changes are happening on a day-to-day basis in the current environment, and the COVID-19 pandemic also seems to create new opportunities for distressed M&A, strategic buyers, private equity and financial sponsors. There are signs that activity is slowly coming back.
Marco Superina, who heads up M&A Switzerland at Credit Suisse, tells news platform Privacy Equity Wire: “It all depends on whether there will be a second wave coming or not. The only scare we see will be a second wave. After Summer break will be when everybody is testing the waters. I think, if you would have asked me two weeks ago I wouldn’t have been so optimistic. Now, I would say that there are promising signs for Q3 activity to pick up pace."
Once European M&A activity picks up again, infrastructure and healthcare are in a good position. “Particularly food producers seem to be doing quite well. We could see some consolidation within the consumer product sector,” said Mark Ziekman, partner at CMS’ Amsterdam offices. “From a legal perspective, locked box seemed to be the norm for PE deals in Western Europe. This now may be changing and there may be more PE deals with a purchase price mechanism. Particularly if US private equity firms get involved,” added Ziekman.
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